Millipore Corp. Reports Operating Results (10-Q)
Millipore Corporation is a leading provider of products and services that improve productivity and results in biopharmaceutical manufacturing and in clinical analytical and research laboratories. The Company is organized in two operating divisions. Its Bioprocess Division helps pharmaceutical and biotechnology companies to optimize their manufacturing productivity ensure the quality of drugs and scale up the production of difficult-to-manufacture biologics. Its Bioscience Division helps optimize laboratory productivity and workflows by providing reagents kits and other enabling technologies and products for life science research and development. Millipore has a deep understanding of its customers' research and manufacturing process needs and offers reliable and innovative tools technologies and services. Millipore Corp. has a market cap of $3.68 billion; its shares were traded at around $66.4 with a P/E ratio of 17.9 and P/S ratio of 2.3. Millipore Corp. had an annual average earning growth of 5.6% over the past 10 years. Highlight of Business Operations: Operating income for the three months ended April 4, 2009 of $71.3 million, representing 17 percent of revenues, increased $13.7 million, or 24 percent, versus the prior year comparable period. The increase in operating income was primarily attributable to our revenue growth and improved operating leverage as a result of cost saving initiatives that we undertook in the second half of 2008 and spending control.
Diluted earnings per share (EPS) of $0.95 in the three months ended April 4, 2009 increased $0.40 from the prior year comparable period primarily attributable to higher business volume, the gain recorded in connection with our acquisition of Guava, and lower interest expense as we continued to pay down debt.
On February 20, 2009, we acquired Guava Technologies, Inc., a provider of easy-to-use benchtop cell analysis systems, for $18.9 million in cash. In connection with the acquisition, we recognized a non-taxable gain of $8.5 million. Under the new accounting standards for business combinations, the acquisition resulted in a gain because the fair value of the net assets acquired exceeded the purchase price. This was primarily attributable to the net operating loss carryforwards that we recognized as deferred tax assets based on our ability to use them in the future. These deferred tax assets could not be utilized by Guava as a result of their operating losses.
Bioprocess revenues of $230.0 million for the three months ended April 4, 2009 increased $13.4 million, or 6 percent, versus the prior year comparable period. The increase included an unfavorable foreign currency translation effect of 7 percent. Adjusting for this item, Bioprocess revenues increased 13 percent for the three months ended April 4, 2009, versus the prior year comparable period. The growth was primarily attributable to higher revenues of our Downstream Bioprocessing products used in biopharmaceutical manufacturing, such as disposable manufacturing products, chromatography media, virus filtration and tangential flow filtration products. This was the result of our large North American biotechnology customers returning to higher levels of spending. In comparison, our revenues for the three months ended March 29, 2008 were very weak because of the decline in sales to the same North American biotechnology customers. These customers
Bioscience revenues of $177.9 million for the three months ended April 4, 2009 decreased $1.7 million, or 1 percent, versus the prior year comparable period. The decrease included an unfavorable foreign currency translation effect of 7 percent and a favorable effect of the Guava acquisition of 1 percent. Adjusting for these items, Bioscience revenues grew 5 percent, which was driven by steady demand for Laboratory Water consumable products and services and higher demand for our Life Science products and services. The Life Science increase was attributable to higher research activities in the protein research and cell biology markets. New products and strong demand for our biomarker validation services and immunoassay kits also contributed to this growth. Although not a significant impact on the Bioscience revenue growth rate, growth of laboratory hardware revenues slowed in the three months ended April 4, 2009. We expect this lower growth rate to continue until economic conditions improve and laboratory renovation and expansion projects resume.
In September 2008, we announced the second phase of our global supply chain initiative, which is part of our long term strategy to further improve the efficiency of our global supply chain. We expect to incur approximately $12 million of additional costs related to this second phase in 2009. Including charges associated with the second phase, we incurred charges associated with our global supply chain initiatives of $3.6 million and $ 2.2 million for the three months ended April 4, 2009 and March 29, 2008, respectively.
Read the The complete ReportMIL is in the portfolios of John Griffin, PRIMECAP Management.